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Key takeaways from Finance Minister Mohammed Al Jadaan’s interview with Bloomberg TV on Friday on the sidelines of WEF in Davos (watch, runtime: 7:31):
TOP PRIORITIES FOR 2024
Reform + diversification: The government plans to “double down on what we are doing in terms of reform and diversifying our economy,” Al Jadaan said, suggesting that policymakers are set to put more firepower behind the country’s economic transformation plan initiated in 2016.
Regional diplomacy: “We don’t want to be distracted by what’s happening, we don’t want to be derailed by what’s happening,” Al Jadaan added, suggesting that policymakers will keep their eyes on economic transformation, while Riyadh leverages its “diplomatic machine to make sure that we de-escalate in the region, bring wisdom, and try to find solutions to the situations in the region.”
OIL WATCH-
“I’m mot worried about that at all,” said Al Jadaan, highlighting that the ministry’s conservative budget approach safeguards against market turmoil and volatility — including dipping oil prices. State revenues still exceeded expectations even as oil ended 2023 at a 20% discount to the projected USD 100 a barrel and production was 17% less than projected (11 mn barrels a month), Al Jadaan explained.
PACING OUT GROWTH-
“The game is efficiency, and the game is economic value,” said the fiscal policy chief, reiterating that the government’s decision to pace out growth by expanding the timeframe for some economic development projects is aimed at managing the import bill and inflation. “We [policymakers] want to make sure that every SAR we spend in the economy is not leaking,” and not fueling inflation.
TAX POLICY-
“There is no intention at all in Saudi Arabia to impose income tax on individuals,” the minister highlighted, explaining that the tax revenues are levied on corporates and foreign investors, while locals pay Zakat. “We are trying to rationalize some of the burden on the economy to make it even more business friendly.”
DEBT WATCH-
The latest three-tranche, USD 12 bn debt financing will be used to fund some of the country’s fiscal deficit, and fast-track projects particularly in the fields of logistics, water treatment, and renewable energy, Al-Jadaan added. “We will tap the markets as opportunities arise,” he said, signaling a plan to sell more bonds.
